Bank of Baroda,, Ahmedabad v. The Dy.CIT, CPC, TDS,, Gaziabad

ITA 1503/AHD/2015 | 2014-2015
Pronouncement Date: 30-11-2017 | Result: Partly Allowed
Expert Summary: The interest levied on the Assessee for delay in payment should be levied from the date on which tax was deducted and till the date on which tax was deposited as per the provision of section 194. Interest would be levied even for delay of a day, if period mentioned above exceeds one month.

Appeal Details

RSA Number 150320514 RSA 2015
Assessee PAN AAACB1534F
Bench Ahmedabad
Appeal Number ITA 1503/AHD/2015
Duration Of Justice 2 year(s) 6 month(s) 3 day(s)
Appellant Bank of Baroda,, Ahmedabad
Respondent The Dy.CIT, CPC, TDS,, Gaziabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags section 201(1A)
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 30-11-2017
Assessment Year 2014-2015
Appeal Filed On 27-05-2015
Judgment Text
ITA NO. 1503/AHD/2015 BANK OF BARODA VS. DCIT ASSESSMENT YEAR: 2014-15 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 1503/AHD/2015 ASSESSMENT YEAR : 2014-15 BANK OF BARODA .............APPELLANT PRITAMNAGAR 1 ST SLOOP ELLISBRIDGE BRANCH AHMEDABAD 380 006 [PAN : AAACB 1534 F] VS. DY. COMMISSIONER OF INCOME-TAX .......................RESPONDENT CPC TDS GHAZIABAD APPEARANCES BY: SN DIVATIA FOR THE APPELLANT VK SINGH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 25.09.2017 DATE OF PRONOUNCING THE ORDER : 30.11.2017 O R D E R PER PRAMOD KUMAR AM: 1. BY WAY OF THIS APPEAL THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 1 ST APRIL 2015 PASSED BY THE CIT(A)-4 AHMEDABAD UPHOL DING THE INTEREST DEMAND UNDER SECTION 201(1A) OF THE INCOME -TAX ACT 1961 FOR THE ASSESSMENT YEAR 2014-15. GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN UPHOLDING THIS LEVY OF INTEREST OF RS.2 78 607/-. 2. THE ISSUE IN APPEAL LIES IN A VERY NARROW COMPAS S OF MATERIAL FACTS. THE ASSESSEE BEFORE US IS A NATIONALIZED BANKS BRANCH OFFICE. THE TAXES DEDUCTED AT SOURCE UNDER SECTION 194A BY THE ASSESSEE FOR THE M ONTH OF SEPTEMBER 2014 WERE DEPOSITED BY THE ASSESSEE ON 8 TH OCTOBER 2014. ON THESE FACTS WHILE PROCESSING THE TDS RETURN UNDER SECTION 200A INTEREST FOR DEL AY IN DEPOSITING THE TAX AT SOURCE FOR A PERIOD OF TWO MONTHS I.E. SEPTEMBER AND OCTO BER 2014 WAS CHARGED. THIS INTEREST AMOUNT OF RS.2 78 607/- WAS SOUGHT TO BE R ECOVERED BY THE ASSESSING OFFICER. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) CONFIRMED THE SAID ACTION OF THE ASSESSING OFFICER AND OBSERVED AS FOLLOWS:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE. THE AP PELLANT HAS CONTENDED THAT THE TAX HAS BEEN DEDUCTED AND PAID THE SAME ALONG W ITH INTEREST ON 08.10.2013 AND AS PER GENERAL CLAUSE ACT THE DATE FROM IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTATION OF PERIOD FOR CHARGI NG INTEREST. THE AO HAS LEVIED INTEREST FOR TWO MONTHS. SECTION 201(1A) CLE ARLY STATES IF A PERSON AFTER DEDUCTING TAX FAILS TO PAY THE TAX IT SHALL BE LIAB LE TO PAY SIMPLE INTEREST AT ONE AND ONE-HALF PERCENT FOR EVERY MONTH OR PART OF A M ONTH ON THE AMOUNT OF ITA NO. 1503/AHD/2015 BANK OF BARODA VS. DCIT ASSESSMENT YEAR: 2014-15 PAGE 2 OF 3 SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCT ED TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID. THE ISSUE IN DISPUTE IS WHETHER THE DAY ON WHICH TAX WAS DEDUCTED IS TO BE EXCLUDED OR NOT. THE HON'BLE APEX COURT IN CRIMINAL APPEAL NO.1079 OF 2006 IN CASE OF M/S ECON ANTRI LT D. VS. RON INDUSTRIES LTD. & ANR IN ORDER DATED 26-03-2013 HAS HELD THAT FOR THE PURPOSE OF CALCULATING PERIOD OF ONE MONTH THE PERIOD HAS TO BE RECKONED BY EXCLUDING THE DATE ON WHICH THE CAUSE OF ACTION AROSE. THE CONTENTION OF APPELLANT THAT PERIOD OF DEFAULT IS TO BE CALCULATED FROM DUE DATE IS INCORR ECT. THE PERIOD IS TO BE CALCULATED FROM THE DATE OF DEDUCTION AND NOT DUE D ATE. ACCORDINGLY THE AO IS DIRECTED NOT TO CHARGE INTEREST FOR TWO MONTHS AND INTEREST IS TO BE LEVIED FOR ONLY 1 MONTH. THIS GROUND IS PARTLY ALLOWED. 3. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 5. WE FIND THAT THE TIME LIMIT FOR DEPOSITING THE T AX DEDUCTED AT SOURCE UNDER SECTION 194A AS SET OUT IN RULE 30(2)(B) WHICH A PPLIES IN THE PRESENT CONTEXT IS ON OR BEFORE SEVEN DAYS FROM THE END OF THE MONTH IN W HICH THE DEDUCTION IS MADE . IN THE CASE BEFORE US THE TDS IS DEPOSITED ON 8 TH OF OCTOBER 2014. THERE IS THUS CLEARLY DELAY IN DEPOSITING TAX AT SOURCE. LEARNED COUNSEL DOES NOT EVEN DISPUTE THAT. ALL THAT HE PRAYS FOR IS THAT THE LEVY OF IN TEREST SHOULD BE REDUCED TO ACTUAL PERIOD OF DELAY IN DEPOSITING THE TAX AT SOURCE I. E. FROM THE DATE ON WHICH TAX WAS DEDUCTED AND TILL THE DATE ON WHICH TAX WAS DEPOSIT ED. IT IS ONLY IF SUCH A PERIOD EXCEEDS ONE MONTH THEN THE QUESTION OF LEVY OF INT EREST WILL ARISE. HOWEVER WHAT HAS BEEN DONE IN THE PRESENT CASE IS THAT THE INTER EST HAS BEEN CHARGED FOR TWO CALENDAR MONTHS I.E. SEPTEMBER AND OCTOBER. THIS PLEA OF THE ASSESSEE INDEED MEETS OUR APPROVAL IN THE SENSE THAT THE QUESTION O F LEVY OF INTEREST FOR THE SECOND MONTH CAN ARISE ONLY IF THE PERIOD OF TIME BETWEEN THE DATE ON WHICH TAX WAS DEDUCTED AND THE DATE ON WHICH TAX WAS PAID TO THE GOVERNMENT EXCEEDS ONE MONTH. WE THEREFORE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE LEVY OF INTEREST UNDER SECTION 201(1A) ACCORDINGLY. 6. AS PER LEARNED COUNSELS PLEA THAT IT IS TOO STR ONG A PUNISHMENT TO LEVY INTEREST FOR A DELAY OF FIRST ONE DAY SUCH A PLEA IS ONLY T O BE NOTED AND REJECTED. WHO WOULD KNOW THE TIME VALUE OF MONEY BETTER THAN A BANKER T HAT THE ASSESSEE IS AND THE INTEREST IS NOTHING MORE THAN A COMPENSATORY LEVY F OR THE TIME DURING WHICH TAX DEDUCTOR ENJOYED THE GOVERNMENT MONEY. THAT IS NOT AT ALL PENAL IN NATURE AND WE DO NOT HAVE ANY AUTHORITY TO RELAX THIS COMPENSATOR Y LEVY. 7. IN THE RESULT THE APPEAL IS PARTLY ALLOWED IN T HE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 30 TH DAY OF NOVEMBER 2017. SD/- SD/- S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD THE 30 TH DAY OF NOVEMBER 2017 **BT ITA NO. 1503/AHD/2015 BANK OF BARODA VS. DCIT ASSESSMENT YEAR: 2014-15 PAGE 3 OF 3 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD 1. DATE OF DICTATION: ......4 PAGES MANUSCRIPTS OF HONBLE AM ATTCHED.30.11.2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ... 30.11.2017........ 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 30.11.2017... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 30.11.2017 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : ... 30.11.2017... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: